THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ANDERSON COOPER, CNN ANCHOR: Good evening, everyone. You said you wanted change in Washington. You voted for a Democratic Congress. Now they are in power. And we're here in Washington, "Keeping Them Honest."

(BEGIN VIDEOTAPE)

ANNOUNCER: Now she's the boss.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: The House will come to order.

ANNOUNCER: So, Madam Speaker, what's next when it comes to our money, our safety, and our loved ones in Iraq?

One hundred hours, big plans, tight schedule -- how much can Democrats really get done with a Republican in the White House?

Big shakeup -- President Bush shuffles the deck. Who is out? Who is in? And will it make a difference in the war?

Plus: Will we be seeing a lot more hearings like this? Democrats promise to keep an eye on things. Republicans warn of a witch-hunt.

(END VIDEOTAPE)

ANNOUNCER: Across the country and around the world, this is a special edition of ANDERSON COOPER 360, "Keeping Them Honest: The First 100 Hours."

Reporting tonight from Capitol Hill, here is Anderson Cooper.

COOPER: And good evening -- a beautiful night here in Washington.

I want to thank our American viewers for watching and those watching around the world right now on CNN International.

We are in a building, on the balcony of a building, named after Joseph Cannon, a House speaker so powerful that his retirement from the House was front-page news in the very first edition of "TIME" magazine.

We're here to cover another front-page day, the first female House speaker, the first Muslim congressman, the first Buddhist, the first time Democrats have controlled both the House and Senate in the Bush administration, day one of a Congress that you elected, because you said you wanted big changes, day one for lawmakers, who are promising a whole host of legislation in their first 100 hours of work.

We're here tonight to help keep them honest. So, throughout the hour, we will be looking at how Democrats hope to make law.

First, though, CNN's Dana Bash on how they are making history.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice-over): A moment to savor -- Nancy Pelosi seized the gavel and, with it, power for the Democrats, an ambitious agenda, but, today, history, the first female speaker, second in line to be president.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: For our daughters and our granddaughters, today we have broken the marble ceiling.

(CHEERING AND APPLAUSE)

BASH: Symbols of a new Democratic era everywhere: Hollywood actor Richard Gere in the gallery, former Republican Speaker Dennis Hastert in the back with the rank-and-file.

Bipartisanship was the buzz word, from the House...

PELOSI: I accept this gavel in the spirit of partnership, not partisanship.

BASH: ... to the Senate, where Democratic Leader Harry Reid began the day with a get-together for senators from both parties.

RICHARD B. CHENEY, VICE PRESIDENT OF THE UNITED STATES: Raise your right hand.

BASH: The vice president swore in 33 senators, giving Democrats their razor-thin majority.

SEN. HARRY REID (D-NV), MAJORITY LEADER: Fifty-one to 49 -- some may look at this as a composition -- as a composition for gridlock, a recipe for gridlock. But I see this as a unique opportunity.

(APPLAUSE)

BASH: Yet, Democrats wasted no time challenging the president on the war.

PELOSI: Nowhere were the American more -- people more clear about the need for a new direction than in the war in Iraq.

(APPLAUSE)

BASH: But, first, the House will debate new ethics measures, like banning gifts from lobbyists. Next week, House Democrats start the clock on 100 legislative hours of campaign promises.

The Senate will work at a slower pace. Passing anything there requires compromise with Republicans. By this was a day for family to come watch history unfold, the first Muslim congressman, 43 black lawmakers, 90 women, led by the new House speaker.

(on camera): The day ended with a traditional phone call from the House speaker to the president, informing him the new Congress is in session. Mr. Bush told Nancy Pelosi he's ready to work with her, an olive branch, but also a reminder, she may wield the speaker's gavel, but he still wields the veto pen.

Dana Bash, CNN, Capitol Hill.

(END VIDEOTAPE)

COOPER: So, what precisely are the Democrats promising? We have got the agenda from the House majority leader's office.

Next Tuesday, the 9th, implement the recommendations of the 9/11 Commission. Wednesday, the 10th, increase the federal minimum wage. Next Thursday, expand stem cell research. Friday, allow the government to negotiate lower Medicare drug prices. Then, on the 17th, cut interest rates on student loans. And, finally, on Thursday, the 18th, end federal subsidies for big oil.

It certainly sounds like a lot to do in 100 hours, but is it really?

CNN's Tom Foreman tonight takes a look.

(BEGIN VIDEOTAPE)

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: The House will come to order.

TOM FOREMAN, CNN CORRESPONDENT (voice-over): One hundred hours to introduce, discuss and pass legislation, 100 hours to get Washington moving. Like schoolkids back from break, the Democrats have sharpened their pencils and say they are ready to work. Is 100 hours enough time?

Maybe, according to longtime capital watcher Norm Ornstein.

NORMAN ORNSTEIN, AMERICAN ENTERPRISE INSTITUTE: What the Democrats have done is to set out a number that sounds like it's going to be a rush of time, but what actually is a fairly long time to process and pass six narrowly-defined bills, with no amendments.

FOREMAN: Count a strict 100 hours from the drop of the gavel, and you run out of time by Monday evening. But this is Washington. Nothing here works like that here. The Democrats are launching their 100-hour push on Tuesday, and counting only the hours that Congress is in session.

Those hours have dwindled dramatically in recent years, as politicians have abandoned the halls of Congress to spend more time raising money and campaigning for reelection. Longtime politicians don't like it.

TOM DASCHLE (D), FORMER SENATE MINORITY LEADER: Senator Lott and I used to joke that, if we really wanted everybody here for every important vote, the only time we could actually schedule it was Wednesday afternoon.

FOREMAN (on camera): This new Congress is promising to get back to something more like a full work week. But can they make that or anything else stick?

(voice-over): The Republican president has a veto pen, and the Democratic edge over Republicans in the Senate is much smaller.

SEN. HARRY REID (D-NV), MAJORITY LEADER: We know, from experience, that majorities come and they go. Majorities are very fragile. And majorities must work with minorities to make that lasting change.

ORNSTEIN: The fact is, the House wants to act now. The Senate wants to act, eh, some time in the future.

FOREMAN: So, even without engaging Iraq right away, the Democrats have their work cut out, 100 hours to show if Washington is seeing real change or just a shift change.

Tom Foreman, CNN, Washington.

(END VIDEOTAPE)

COOPER: Well, for a closer look, we're joined now by CNN's Candy Crowley and John King, along with former presidential adviser David Gergen, and, here with me, political writer Joe Klein, whose column appears in the latest edition of "TIME" magazine, now hitting the streets on Friday, for the first time in half-a-century.

Congratulations about that, which, of course, we should say, for fairness, "TIME" is, of course, part of the Time Warner family.

Joe, thanks for being with us.

Let me start with you.

This spirit of bipartisanship, is this for real? How long does this thing last?

JOE KLEIN, COLUMNIST, "TIME": Until they start talking about Iraq, I think, and, also, until the Democrats start investigating the Bush administration. And we will see how far they go.

COOPER: So, once there starts being subpoenas...

KLEIN: Right.

COOPER: ... once there starts being meetings... KLEIN: Right.

COOPER: ... it -- it kind of goes away?

KLEIN: But these first six -- six bills are going to pass the way the Contract With America passed in 1995, and very quickly through the House. And, then, practically nothing happened in the Senate. I think that this group of bills will have a better fate than the Contract With America.

COOPER: David Gergen, what about it? I mean, only in Washington is 100 hours not really 100 hours, and it doesn't really start when Congress starts.

DAVID GERGEN, FORMER PRESIDENTIAL ADVISER: Yes.

But, Anderson, this has the ring of -- 100 hours, of course, is -- is reminiscent of the 100 days of Franklin Roosevelt. It's a -- it's an old magic formula in politics. I think they will get some progress here in these first 100 hours.

And I bet they get all six bills down in the -- in the first 100 hours, as they promised. These people are -- they ran a very disciplined campaign, especially for Democrats. And I think they will get that done.

But, As Joe Klein says, the bipartisanship will probably stop Tuesday night or Wednesday night, when we hear from the president about Iraq.

COOPER: John, what do we -- what do we expect to hear from the president about Iraq?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, you will hear from the president either Wednesday or Thursday.

By all indications, Anderson, we are being told by a number of sources in the administration that, on the table, and almost certain to be in the speech, is the idea of temporarily surging U.S. troop levels by 20,000, perhaps 25,000 or 30,000 U.S. troops. And that will immediately cause a divide, but not just among the Democrats. Republicans are divided about whether a troop surge is a good idea, as well.

So, certainly, the president is one -- the president's speech on Iraq is one thing that could threaten bipartisanship, certainly will threaten bipartisanship. And I think, Anderson, of the six bills that will be debated in the House in that so-called first 100 hours, remember, stem cell research is also in there. When it gets to the Senate, that could be the first filibuster of the new Congress.

COOPER: Candy, it does become a real question, where are the Republicans on Iraq?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, absolutely. And -- and the -- but the thing to remember is, this is not going to come to a vote. The president remains the commander in chief. If he wants to have a surge of 20,000, 30,000, 40,000 troops, that is clearly up to him.

What has changed now, Anderson, is that Democrats have a bigger microphone. I think we saw that with Speaker Pelosi in her first speech, said, it's the president's responsibility to do something about Iraq.

No one would have listened last November, because that was sort of a Democratic background noise. But now they are the majority. People are listening. And they can use their bully pulpit to try to push the president publicly.

KLEIN: You know, Anderson, this was probably Nancy Pelosi's most effective public moment.

I mean, she hit every note perfectly today, down to having the kids join her at the end of the -- at the -- at the end of the -- the program.

And, for the first time in George Bush's slow progress toward accepting reality, this new dramatic reality in Iraq, this might -- this had to be a dramatic moment, because this was a woman with a very big voice today.

COOPER: We are going to take a short break with -- from our -- from our roundtable here. We will be joined again by them in just a few minutes -- a lot to cover tonight, in terms of the -- what is coming next.

Is it the issue for Congress, and what -- what -- what -- what put the Democrats in power? Tonight, there is already a war of words between Congress and the president over Iraq. We will talk about that ahead with our panel.

And here come the hearings, as Joe was talking about. Will Democrats use their control to get revenge on Republicans?

And we're "Keeping Them Honest." And you paid attention -- a follow-up to last night's story about congressional crooks still living high on the hog, getting paid fat pensions. And guess what? You are footing the -- footing the -- footing the bill. Will something be done about it? Find out when 360 continues.

(COMMERCIAL BREAK)

COOPER: Well, no back-rubs for German Chancellor Angela Merkel today. Today, President Bush made light of that impromptu and some said unusual massage he gave Merkel at the G8 Summit.

The president also used the news conference after their meeting to address some serious issues, including when he will announce his new policy on Iraq.

With that, CNN's Ed Henry.

(BEGIN VIDEOTAPE)

ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): Senior officials say the president now plans to reveal his latest Iraq strategy in a prime-time address to the nation, either next Wednesday or Thursday, though Mr. Bush was still coy about the details during a joint press availability with German Chancellor Angela Merkel.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: My thinking is taking shape. I'm -- I will be ready to outline a strategy that will help the Iraqis achieve the objective of a country that can govern, sustain and defend itself sometime next week. I have still got consultations to go through.

HENRY: Those consultations include a secure videoconference Thursday with Iraqi Prime Minister Nouri al-Maliki that lasted two hours. His characterization of what he told Maliki hinted at what White House officials privately say the president is likely to unveil next week, a plan to surge 20,000 to 30,000 more U.S. troops to Iraq.

BUSH: I said that: You show the will, we will help you. And that's -- I'm in the process of making up my final decision as to what to recommend -- what recommendations to accept. One thing is for certain: I will want to make sure that the mission is clear and specific and can be accomplished.

HENRY: That seemed to be an olive branch to military commanders who have privately argued against sending more troops to Iraq without a clearly defined role. But the president still has to sell his policy to skeptical Democrats, taking power on Capitol Hill.

JOHN PODESTA, FORMER CLINTON WHITE HOUSE CHIEF OF STAFF: I think he's lost control events in Iraq, and needs to gain control back.

HENRY (on camera): That task is complicated by the fact that the president is now reshuffling key players, with U.S. Ambassador to Iraq Zalmay Khalilzad expected to move to the top U.S. post at the United Nations.

(voice-over): Retired Vice Admiral Mike McConnell will become director of national intelligence, replacing John Negroponte, who takes over as deputy to Secretary of State Condoleezza Rice.

And the president is soon expected to replace his top military commanders, Generals George Casey and John Abizaid. None of these individual moves are that dramatic or unexpected, but, combined with Thursday's resignation of the president's longtime friend, counsel Harriet Miers, these changes signal a president taking one last shot at fixing Iraq, before fading off into lame-duck status.

Ed Henry, CNN, the White House.

(END VIDEOTAPE)

COOPER: Well, Iraq is the issue that put the Democrats in power, of course. And now they're pressuring President Bush to bring troops home from Iraq.

A bipartisan group of House members is drafting a resolution calling on the administration to present a plan for withdrawal.

CNN's John King reports on that now live from Washington.

(BEGIN VIDEOTAPE)

KING (voice-over): The war that shaped the midterm elections immediately became a defining issue in the new Congress.

From the just-installed Democratic speaker, a message to the Republican president:

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: The American people rejected an open-ended obligation to a war without end.

KING: Across the Capitol, the Senate majority leader served notice, Democrats plan to frequently summon top administration officials and military leaders for Iraq oversight hearings.

SEN. HARRY REID (D-NV), MAJORITY LEADER: Completing the mission in Iraq is the president's job. And we will do everything to assist the commander in chief to ensure his responsibilities.

KING: But, for all their new power, Democrats have limited influence over a wartime commander in chief. One power they do have, to cut off funding for the war, is something some Democratic liberals believe should be kept on the table.

REP. DENNIS KUCINICH (D), OHIO: This is the moment. We need to call our Democratic leaders to courage.

KING: But most Democrats think cutting off the money would be both bad policy and political suicide.

And Speaker Pelosi and top deputies are making clear, they will not even consider it.

REP. JOHN SPRATT (D), SOUTH CAROLINA: So long as we have troops in field in harm's way making the best of a bad situation, they have got our full support. We certainly wouldn't cut the funds out from under them and leave them in the lurch.

JEREMY ROSNER, DEMOCRATIC POLLSTER: It's a big change from the Vietnam era, when -- when the Democrats in the Congress did move to cut off funding. She has staked out a very clear and broad position, that they are going to rely on oversight and tough scrutiny, but not on cutting off the funding.

KING: Democratic unity could be strained when the president unveils his new Iraq strategy next week. Some Democrats, Majority Leader Reid among them, say they are open to a temporary increase in troop levels, as long as it is tied to promises of substantial troop reductions in the near future. But most Democrats are adamantly opposed to any troop increase, a disagreement Republicans will look to exploit.

SEN. JOHN CORNYN (R), TEXAS: Democrats are now in control. They can't just criticize. They are going to have to come up with constructive alternatives.

KING: Yet, Republicans are split on idea of a troop surge, too. And, for all the focus on Democrats, Senator Cornyn is among perhaps the group on Capitol Hill most worth watching. Of the 33 senators up for reelection in 2008, 21 are Republicans.

ROSNER: And a lot of them are in pretty moderate states, like Maine and Colorado, where -- where they are going to get a lot of pressure as they try to run for reelection. They -- they saw what happened to their colleagues in the House in 2006, who had to defend this war in Iraq. And they don't want the same thing to happen in 2008. So, I think that's where the pressure will come from.

KING: The war that shaped the last campaign already influencing the next one.

John King, CNN, Washington.

(END VIDEOTAPE)

COOPER: Yes, no doubt about that.

Today, the president spoke about the execution of Saddam Hussein, for the first time, telling reporters he wished -- quote -- "The proceedings had gone in a more dignified way." But he says, Hussein was given justice.

Meanwhile, in Iraq, a second security guard at the hanging was detained for questioning today, as part of the investigation into who leaked the cell phone video of Saddam's last months.

Also today, Al-Jazeera denied it was behind the leaked video. White House Press Secretary Tony Snow says the president has not seen the video.

And programming note: Don't miss a special edition of 360 tomorrow night, a look at the lives of four Marines, four American heroes killed on what remains the deadliest day in Iraq for U.S. forces. It is called "Ambush at the River of Secrets." We have gotten a tremendous response from the first viewing of this. You will not want to miss it, especially if you know somebody who is serving or has served in the military. It is a remarkable piece of work by CNN's Tom Foreman. It is tomorrow at 11:00 p.m. Eastern time, 8:00 Pacific.

Up next tonight, in this hour, our roundtable weighs in on the president's options for Iraq. Is there really a good option?

And no more sharing box seats or corporate jets with lobbyists -- the Democrats' new ethics rules, will they really change the way this place works? -- when 360 continues.

(COMMERCIAL BREAK)

COOPER: The war in Iraq, is there really any good way out? We will ask the experts -- next on 360.

(COMMERCIAL BREAK)

COOPER: As you heard earlier in Ed Henry's report, President Bush says he's going to announce his plans for the war in Iraq some time next week.

Democratic congressional leaders are sending signals that any plan to send more U.S. troops into Iraq will get a cool reception.

Joining us again to talk about Iraq, CNN's Candy Crowley and John King, along with former presidential adviser David Gergen and "TIME" magazine columnist Joe Klein.

Joe, let's start with you.

A cool reception, but can they do anything more than that?

KLEIN: Well, I think they are being very judicious about this, because they are afraid that, if they go too hard against this war, and the bottom falls out, as it's likely to, the president and the Republicans will be able to blame them for losing the war.

COOPER: John -- John, there has been a major reshuffling of President Bush's national security team. What do you make of it?

KING: Well, it is designed to try to give the president a fresh start.

It is also designed especially on the idea of moving John Negroponte from director of national intelligence over to the State Department. He was the ambassador to Iraq beforehand. His job at the State Department will be, first and foremost, to help with Iraq policy.

If Zal Khalilzad, as we expect, goes to the United Nations, you are also taking another Bush Iraq hand and putting him front and center here in the United States.

But, Anderson, you can move people around. You can move personnel around. We have had that at the Defense Department as well. Everyone in Washington is saying, what is the policy, Mr. President?

And many, frankly, are starting to get a little agitated about this, saying, why is it taking so long? If you have been the commander in chief all along, why does it take you so long to come up with a new strategy?

And the major explanation for that is that it's going to be very hard for the Pentagon to find 20,000 or more troops, to get them into Iraq quickly. And that is what is taking the time, finding exactly where you would get those troops and how fast you could transport them in.

COOPER: Well, Candy, talking about time, what do you make of the timing of all these announcements by the president?

CROWLEY: Well, I think this is part of the rollout up to this speech.

It puts a new team in place, particularly a new diplomatic team, sort of signaling that he's going to rely on diplomacy. And a lot of people have accused him of not doing that, as much as relying on the military.

So, it's part of a sort of a slow roll. But John is exactly right. You hear from Republicans on Capitol Hill -- you hear certainly from Democrats -- what -- what is taking this so long? And -- and it's a good talking point for Democrats, as I'm sure you have heard, when they say, you know, every day, young men and women are dying over there, and we're sort of fiddling around here; where is the policy?

So, we expect to hear it sooner, rather than later, some time next week.

COOPER: David, are the changes real?

GERGEN: I think the changes in policy will be real, but they may not go far enough to -- to really please the hard-liners.

This has taken an awful long time. It has been more than two months now since the country spoke in the elections, asking for a change of course that was then promised before Christmas. Still don't have it.

But I have to tell you, Anderson, I -- I believe the changes on the -- on the diplomatic side are smart, and they are very worthwhile. They prepare the administration to be in much better shape for a diplomatic surge here in the next few weeks.

Condi Rice, at the State Department, over the last six months, has lost two of her top deputies, her deputy Bob Zoellick, and then her counselor Phil Zelikow -- huge losses. She hasn't been able to fill those positions.

Moving John Negroponte out there now gives her someone at her side to conduct diplomacy. Putting Khalilzad at the U.N., that puts a much stronger front line up there for diplomatic purposes.

And there's -- as -- as you know, the Democrats, along with Baker-Hamilton and the Republicans, all want to see more done on the diplomatic front. She was too shorthanded to do that before.

KLEIN: you know, Anderson, one of the reasons why this has taken so long is that we're really seeing a major change in military strategy here, from a policy of force protection, which is Generals Abizaid and Casey favored, to a full-blown, classic counterinsurgency strategy.

And that's why naming General David Petraeus, who is a real military intellectual, the guy in charge of our land forces in Iraq today, may be the most important decision the president has made.

(CROSSTALK)

COOPER: David Petraeus formerly commanded the area around Mosul.

And then he...

KLEIN: Right.

COOPER: Then he was also in charge of retraining the Iraqi forces.

KLEIN: But the Mosul example is the key here. And that's why this is going to be so hard.

He actually did a counterinsurgency surge in Mosul. He put troops in the -- in the streets 24/7. He had local patrol bases. He calmed that city down. And we thought it was done, and we pulled his troops out, the 101st Airborne. And then Mosul just blew up all over again, which is exactly what people fear about this surging strategy in Baghdad.

COOPER: A skeptic would say, look, Petraeus was also put in charge retraining the Iraqi security forces, as I remember, two or three years ago. He was on the cover of "TIME" or "Newsweek" when he did that,. There was a lot of hoopla about it. Certainly didn't seem to work out very well.

KLEIN: Right. Well, it wasn't -- it certainly didn't and that was, in part, because they were trying to do it so quickly. These were nine-week wonders. And also, we haven't really seen very many effective Iraqi military units that were not militias.

GERGEN: Anderson, if I could just add, I want to -- I spent a couple of days with General Petraeus at Leavenworth at the commander general staff college this last fall. He is first rate. He may not be able to solve the problem, but he's one of the best the army has, one of the most promising officers. To have him there now is an excellent move.

KLEIN: He's also a protege of General Jack Kean, who is the guy who came up with this surge strategy that the president seems to be going with.

COOPER: He's also sort of, I mean, I remember interviewing him in Iraq. He's obviously a personally impressive person. He's sort of an intellectual warrior?

KLEIN: Yes. He has a Ph.D. from Princeton in international relations.

COOPER: And are you seeing more of that. I mean, is this all -- is this is all drawing back to Donald Rumsfeld leaving?

KLEIN: A good part of it. I mean, what Rumsfeld was mostly interested in was one we could draw down and get out. What generals Abizaid and Casey were mostly interested in was force protection, keeping our casualties low. And we should be very clear about this, if we actually go ahead with a serious counter-insurgency strategy in Baghdad, our -- our casualties are going to skyrocket.

COOPER: John, Senator Carl Levin has come out and said he might support a temporary surge in troop levels. Other Democrats are saying they would oppose that. If the -- how important is it that the Democrats, to be -- speaking if one voice on this debate on the war?

JOHN KING, CNN ANCHOR: Well, any division among the Democrats will break the unity they have at the beginning of this. And here's how the Democrats will try to deal with that. What all the Democrats are saying right now essentially to keep their cards playing closely. We'll wait to listen to the president. We're certainly not going to say we're opposed to it until we hear from the president has to say.

The way the Democrats are trying to deal with this, Anderson, if you want to do this, Mr. President, we know you want to do it at the White House. We think the vice president wants to do this. But we've heard there's all this disagreement in the Pentagon, as you and Joe and David have been talking about.

So what the Democrats will do is call the generals, put them right there, up on Capitol Hill, under oath, pressure them with hard questions to make sure the generals agree with the strategy that the president has put forward.

That is the biggest change here. The Democrats have the power to do something the Republican Congress simply refused to do with a Republican president, and that is ask a lot of tough questions.

COOPER: We'll talk to Candy and John and David and Joe again a little bit later on on 360.

The 110th Congress does have more on its agenda, especially ethics reforms. But how serious are they, really? Can Nancy Pelosi and the Democrats really make good on their promise to change what they call the culture of corruption on Capitol Hill? Or will it still be business as usual between lobbyists and lawmakers?

Right now, everyone is talking about bipartisanship. Later on, we're going to look at how long that happy talk will last if ethics reform means subpoenas and investigations.

Plus, an update to a story that outraged a lot of you. Your money, taxpayer dollars paying the pensions of congressional criminals, still living off your money. Can it be stopped? We're "Keeping Them Honest", next on 360.

(COMMERCIAL BREAK)

COOPER: Nancy Pelosi said she broke the marble ceiling when she was elected the nation's first ever female House speaker. First on her agenda is ethics reform. House Democrats passed a package today. They included banning gifts from lobbyists, prohibiting travel on private jets and requiring greater public exposure, targeting special interest legislation.

The goal is to wipe out what the Democrats have called the culture of corruption that scandalized the last Congress. The question is, though, is that really possible?

REP. NANCY PELOSI (D-PA), SPEAKER OF THE HOUSE: Our first order of business is passing the toughest congressional ethics reform in history.

JOHNS: No secret that it's been ugly here. Scandals, indictments, golf trips, favors for official acts, charges of bribery, corruption. Members of Congress, staffers, lobbyists, mostly Republicans, all got sucked in over the last year, and the House Ethics Committee, which is supposed to handle all this stuff, was asleep at the wheel.

Congress has a hangover now. Call it public disgust. And Democrats, who ran the last campaign against what they called the culture of corruption, are now in the position of having to do something about it.

With a plan to ban gifts from and travel paid for by lobbyists, prohibiting use of corporate jets and full disclosure before members slip pet projects known as earmarks into spending bills.

A former senior aide to Republican Tom DeLay, who under a cloud of suspicion and lawsuits stepped down as majority leader then actually gave up his House seat, says this is all a good start, but keeping them honest, this kind of thing cuts both ways.

STUART ROY, REPUBLICAN CONSULTANT: The real danger in any sort of ethics reform, is that no party has cornered the market on ethics and morality, and if you try to use ethics as a partisan sword, you're libel to find that the blood on the sword will be your own.

JOHNS: Democrats have their own members with pending problems, like Congressman William Jefferson of Louisiana, nicknamed Dollar Bill, who got caught with $90,000 of FBI bait money in his freezer in a bribery investigation. Jefferson denies wrongdoing, hasn't been charged and was in fact re-elected.

So how are the Democrats planning to deal with that?

REP. RAHM EMANUEL (D-IL), DEMOCRATIC CAUCUS CHAIRMAN: The whole thing we'll do is make sure that this Congress is operating with a different set of standards and a different ethical standard than the past, and we will.

JOHNS (on camera): Experts say Democrats need outside, independent review of ethics matter to help Congress police itself. There could be a fight over that, and they need some real enforcement.

(voice-over) Still, history on the Hill suggests there's no way to stop someone in Congress in either party from behaving badly if they really want to do it, which leads some to simply appeal to a higher authority.

REP. DENNIS KUCINICH (D-OH), PRESIDENTIAL CANDIDATE: Remember the Lord's Prayer. Lead us not into temptation but deliver us from evil

JOHNS: temptation for the Democrats. They're in power and power and money are the ultimate magnets of corruption.

Joe Johns, CNN, Washington.

(END VIDEOTAPE)

COOPER: They certainly are. And it's not just ethics. Democrats are promising to keep an eye on a lot of things. Some Republicans are fearing this could turn into a witch-hunt.

With that story, here's CNN's Brian Todd.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice-over): On Capitol Hill, they smile, shake hands, swear the oath. Down the street they may just be swearing.

It's payback time in Washington. Newly empowered Democrats, after years of frustration over Iraq, prewar intelligence, the wiretapping controversy, are prepared to launch an onslaught of subpoenas that might drive an already embattled White House to distraction.

NORMAN ORNSTEIN, CO-AUTHOR, "THE BROKEN BRANCH": There's no question we're going to see a huge number of investigations taking place.

TODD: Experts say Henry Waxman is likely to lead the charge. As the new Democratic chairman of the House Government Reform Committee, Waxman has the power to look into Halliburton contracts or energy deals by Bush allies. A Waxman aide says he won't conduct witch- hunts.

Congress watchers agree, but Waxman has been a relentless Bush critic and will likely be a formidable force.

STUART ROTHENBERG, ROTHENBERG POLITICAL REPORT: He's tenacious. He's regarded as an attack dog. He's a good interrogator. And he apparently likes to do it.

TODD: Waxman's colleague, John Conyers, isn't a Bush critic. He's previously looked into grounds to impeach the president. Conyers takes over the House Judiciary Committee. Patrick Leahy takes over Senate Judiciary. Experts say they give some people in the Justice Department reason to be nervous over the domestic surveillance and detainee programs.

ORNSTEIN: The House and Senate judiciary committees are going to pounce all over Attorney General Alberto Gonzalez with questions about how he is protecting or not protecting basic civil liberties in the country.

PELOSI: I accept this gavel in the spirit of partnership, not partisanship.

TODD: Nancy Pelosi and Harry Reid will be crucial to this equation.

(on camera) Pelosi has said subpoenas of White House officials will be a last resort. Political observers say for the Democrats' own sake, they better be.

KEN RUDIN, NATIONAL PUBLIC RADIO: If the Democrats are involved in some kind of a payback, when the Democratic Congress comes up for renewal, the voters may say they overreached.

TODD: The challenge to rein in the committee chairmen may present itself to Pelosi and Reid sooner, rather than later. We're told by congressional aides there are at least six hearings on Iraq and the war on terror on the schedule this month alone.

Brian Todd, CNN Washington.

(END VIDEOTAPE)

COOPER: Coming up, we'll have more on the new agenda here on Capitol Hill. Democrats saying that cutting interest rates for student loans is a priority in the first 100 hour. But is that enough to help the middle class? And will Republicans go along with the plan?

And many of you were shocked to learn that your tax dollars are paying for the retirement of convicted felons who were members of Congress. Some members of Congress are no speaking out. An update when 360 continues.

(COMMERCIAL BREAK)

COOPER: A follow-up to a story we brought you last night. As part of our continuing efforts to keep people in power accountable, we told you how your tax dollars are being used to pay for the pensions of convicted congressmen. Your response in our blog was overwhelming with many of you expressing anger and surprise and, frankly, disbelief.

With an update now, here is CNN's Drew Griffin, "Keeping Them Honest".

Convicted congressman James Traficant, who snubbed his fellow colleagues gets 40,000 while serving prison time as well, and they are not alone.

The National Taxpayers Union says 20 lawmakers convicted of crimes over the last 25 years still got their pensions. And the NTU estimates about a million taxpayers dollars every year are going to the pensions of congressional crooks.

JOHN BERTHOUD, NATIONAL TAXPAYERS UNION: It's hard, unless maybe you're a member of Congress or a former member of Congress, for anybody to understand how on earth you could ask taxpayers to pay pensions for people like that.

GRIFFIN: that's what we wanted to ask former powerful chairman of the House Ways and Means Committee Dan Rostenkowski, he went to prison for stealing public money. Now he gets an estimated $126,000 a year federal prison. Rostenkowski told us no comment on the phone and wouldn't answer his door.

Duke Cunningham and James Traficant didn't respond to our letters. Maybe with good reason. Over the course of their retirements, Rostenkowski is expected to make $2.9 million. Cunningham may get $1.8 million. And Traficant should hit the $1.2 million mark.

Because federal pensions are secret, all of the figures you've seen in this report are estimates based on the Taxpayers Union's calculations.

So, who is responding to our report? You. Our blog is filled with comments like: "What a scam" and "You wonder why we have such a deficit." "This is un -- blanking -- believable." "And I thought crime didn't pay. It obviously pays for these felons."

Despite several attempts in Congress to stop paying pensions of convicted lawmakers, or at least congressmen convicted of felony, it hasn't happened yet. But that may be changing.

UNIDENTIFIED MALE: I think it's essential that we deny a pension to any member of Congress convicted of a felony. It's the law of many states.

GRIFFIN: Congressman Mark Kirk is from Illinois, the state that just revoked the $200,000 a year pension of its former governor, George Ryan, now convicted of extortion and bribery.

Ryan won't be getting any taxpayer funded pension, and Kirk says neither should federal lawmakers convicted of crimes. His bill last year didn't pass the House, nor did a similar bill back in 1996. But Kirk says, in the new Congress, the time may now be right.

Speaker Nancy Pelosi's office says the speaker has supported the felony conviction clause for pensions before and said it would be considered by the relevant committees of jurisdiction in the 110th Congress.

And Kirk, a Republican, says he looks forward to working with Pelosi, a Democrat, to clean a House they both agree needs cleaning.

UNIDENTIFIED MALE: And she should help pass this very simple, common sense regulation to kill the pension for members of Congress convicted of a felony.

GRIFFIN: We're "Keeping Them Honest". Stand by.

Drew Griffin, CNN, Atlanta.

(END VIDEOTAPE)

COOPER: We should take a look at who didn't pass that bill the last time and who voted against it and why. Maybe we'll ask them that tomorrow night.

Coming up, our "Shot of the Day". Last night, we introduced you to New York City's subway hero. He really appreciates all the attention he's getting. Wait until you see how he showed his appreciation today. That's "The Shot".

But first, Randi Kaye joins us with a 360 news and business bulletin -- Randi.

RANDI KAYE, CNN ANCHOR: Hi, Anderson.

Indonesian officials say a jetliner carrying 102 people did not send out a distress signal or report any mechanical problems before disappearing three days ago. A massive sea and land search continues for the plane or any survivors.

The jetliner vanished New Year's Day in some stormy weather. There were false reports the next day that the plane and some survivors had been found.

And update now on a story we've been following, a honeymooner who disappeared 18 months ago while on a cruise ship in the Mediterranean. Today Royal Caribbean Cruiselines agreed to pay $950,000 to the estate of George Allen Smith IV. It will also pay up to $110,000 in legal costs to his widow.

Smith's family has maintained that he was murdered and accused the cruise line of trying to cover it up. The FBI says the investigation into his disappearance is ongoing.

On Wall Street, a positive day. The Dow gained six points. The NASDAQ climbed more than 30 and the S&P added almost two points.

And the holiday shopping season turned out to be a big disappointment for U.S. retailers. Many stores say the mild weather cut down on sales of winter clothing, and a shopping surge just before and after Christmas was not enough to boost the profits -- Anderson.

COOPER: Randi, check out "The Shot of the Day". I know you are very familiar with this story. Last night on 360, Randi introduced us to New York City's subway hero, Wesley Autrey.

He's basking in well-deserved attention he's getting for saving a stranger who literally fell onto the tracks of the subway station. I guess you can say Wesley is just a touchy-feely type of guy. Today he was hailed as a hero, and he hugged Mayor Michael Bloomberg at city hall.

Wesley showed his appreciated by giving the mayor a hug. Yesterday when he met the father of the young man he saved, Wesley planted a kiss on the guy. Our favorite moment, though, on 360 was last night when Wesley showed our Randi Kaye how he held onto the student on those tracks. And the...

KAYE: That's the bear hug.

COOPER: You looked surprised.

KAYE: I was a little surprised, but you know, given what he had done by saving that guy on the tracks, I knew I was in good hands. I just didn't expect to be in his hands right away like that.

COOPER: He was -- his story is amazing, and he deserves all the attention and all the praise he's getting.

KAYE: He sure does.

COOPER: Yes, it was a great story you filed. Randi, thanks very much.

A lot more coming up tonight in the program. More here on what the Democrats are doing on Capitol Hill.

We'll take a short break. We'll show you what Oprah's doing in South Africa. We'll be right back.

(COMMERCIAL BREAK)

COOPER: You elected them to make a difference. They're promising big changes. Now it gets interesting. The Democrats control Congress. We're here, "Keeping Them Honest".

(BEGIN VIDEOTAPE)

ANNOUNCER: Taking control.

PELOSI: The election of 2006 was a call to change.

ANNOUNCER: A new Congress, a new agenda, from ethics to Iraq. We're "Keeping Them Honest".

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: This idea of escalating the war is an enormous mistake.

ANNOUNCER: Ready for round two. John Edwards has a message for John McCain.

EDWARDS: I'm ready to be president.

ANNOUNCER: Risky business.

UNIDENTIFIED FEMALE: Do you want to go drive a truck in Iraq where there's a war going on? Are you kidding me?

ANNOUNCER: Tens of thousands of civilians are working in Iraq. Hundreds have been killed. The stories you haven't heard.

Across the country and around the world, this is a special edition of ANDERSON COOPER 360, "Keeping Them Honest: The First 100 Hours". Reporting tonight from Capitol Hill, here's Anderson Cooper.

(END VIDEOTAPE)

COOPER: Thanks for joining us in this hour of 360. We begin here in Washington on an historic day, a day that saw the first female speaker of the House.

For the first time in 12 years, the Democrats control, barely, both chambers of Congress, the first time, critics say, that the Bush administration will have a check on its power.

House Democrats say they'll play the part responsibly with your mandate and your money. They're promising to pass legislation on six big issues in their first 100 hours of work.

In the hour ahead, we'll look at whether they can and how much of it will get past the president. First, though, CNN's Andrea Koppel sets the stage.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: To the first woman speaker in our history, the gentle lady from California, Nancy Pelosi.

ANDREA KOPPEL, CNN CORRESPONDENT (voice-over): It was a day for the history books.

PELOSI: For our daughters and our granddaughters, today we have broken the marble ceiling.

KOPPEL: And surrounded by her grandchildren with other political pioneers looking on and a couple of celebrities looking down, Speaker Nancy Pelosi became the highest ranking elected woman in U.S. history, now just two heartbeats from the presidency.

And she wasted no time putting Mr. Bush on notice on Iraq.

PELOSI: The election of 2006 was a call to change. Nowhere were the American more -- people more clear about the need for a new direction than in the war in Iraq.

On the other side of the Capitol, the new Senate majority leader made clear Democrats expected the president's new plan on Iraq to bring U.S. troops home, but he didn't say when.

KOPPEL: The images of power gained and power lost were hard to miss. The longest serving Republican speaker, Dennis Hastert, seemed almost hidden amidst a sea of members.

With her 31-seat majority, Speaker Pelosi got down to business right away. Topping her to-do list, passing House rules as soon as this week banning members from receiving gifts and free travel from lobbyists.

But first, a conference call with the president.

PELOSI: We're calling to give you the good news that this Congress is now fully sworn in and ready to work with you.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Well, I'm ready to work with you. All I know is it's a tremendous moment for you personally. And I congratulate you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.voxant.com